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A new trading week got off to a lacklustre start with regional markets softening as investors wait to see if Wall Street’s record run has any juice left.
The S&P/ASX 200 quickly gave up early gains to finish five points or 0.06 per cent lower. Today’s setback ended a run of three straight advances.
Gains in resource stocks and industrials were outweighed by declines in growth stocks and bond proxies. Woodside, Newcrest and Westpac were the pick of the heavyweights. Macquarie Group and ANZ dragged as they traded ex-dividend.
What moved the market
A retreat in US equity futures overshadowed a positive end to last week on Wall Street. S&P 500 futures declined 11 points or 0.22 per cent, hinting at early pressure tonight following seven straight record closes. Futures for the Nasdaq Composite, which has not suffered a setback in ten sessions, dropped 68 points or 0.41 per cent.
In Asia, the Asia Dow fell 0.49 per cent, Hong Kong’s Hang Seng 0.57 per cent and Japan’s Nikkei 0.32 per cent. China’s Shanghai Composite edged up 0.1 per cent.
All three major US indices finished at records on Friday after October jobs data confirmed the economy was regaining momentum after the Delta dip. Reopening plays such as airlines, hotels and cruise companies rallied after Pfizer reported a breakthrough in treating Covid-19.
“The pivot towards re-opening gained further momentum after Pfizer said its latest COVID-19 drug used in combination with an HIV drug, cut the risk of hospitalisation by 89%,” NAB’s Director of Economics Tapas Strickland said. “Bullish remarks by Pfizer Board Member and former-FDA commissioner Dr Gottlieb also added; he noted ‘By Jan. 4, this pandemic may well be over, at least as it relates to the United States’.”
Reopening stocks were amongst today’s best ASX performers. Flight Centre jumped 5.71 per cent, Webjet 4.76 per cent, Qantas 4.09 per cent and Corporate Travel Management 1.61 per cent.
Shopping centre landlords advanced in anticipation of more foot traffic. Unibail-Rodamco-Westfield put on 3.67 per cent, Scentre Group 2.92 per cent and Vicinity Centres 1.42 per cent.
A 13-year high in job advertising pointed to strong demand for labour and pressure on wages. National skilled job vacancies jumped by 7.8 per cent last month to 250,882 vacant positions, the biggest rise in seven months.
“A key indicator of labour demand today showed that a hiring surge is imminent after lockdowns in Australia’s south-east,” CommSec senior economist Ryan Felsman said. But he warned the reopening of borders could take the heat out of the labour market, inflation and wages growth, as well as pushing rate rises further into the future.
“The expected inflow of foreign labour… could actually dent wage growth momentum and underlying inflationary pressures as work supply increases, keeping the Reserve Bank on the policy sidelines for an extended period.”
Winners’ circle
BHP accelerated its retreat from fossil fuels by selling its 80 per cent interest in BHP Mitsui Coal to Stanmore Resources. The deal values BHP’s stake in the Queensland metallurgical coal venture at up to US$1.35 billion. Stanmore shares jumped 14.01 per cent. BHP gained 0.8 per cent.
Sydney Airport climbed 2.79 per cent after agreeing to be acquired by a consortium of investors in a deal valuing the stock at $23.6 billion. The company has entered into a scheme implementation deed with the Sydney Aviation Alliance.
Gold’s highest finish since early September boosted miners. St Barbara put on 5.23 per cent, Evolution Mining 4.03 per cent, Perseus 4.35 per cent and Newcrest 1.2 per cent.
Energy companies rose as a rebound in crude off a four-week low accelerated. Woodside gained 2.97 per cent, Santos 3.07 per cent and Beach Energy 4.3 per cent.
Doghouse
Aristocrat Leisure sagged 2.13 per cent after its takeover of UK gaming software firm Playtech was threatened by a rival bid. Playtech’s largest shareholder, Hong Kong investment firm Gopher Resources, has requested access to Playtech’s books to perform due diligence. Aristocrat noted the board of Playtech had already recommended its bid.
Wesfarmers eased 0.5 per cent after emerging as the winner of a tussle with Sigma Health to acquire Australian Pharmaceutical Industries. The retail conglomerate will acquire API for $1.55 a share in a deal valuing the target company at more than $760 million. API gained 3.7 per cent. Sigma shares retreated 0.9 per cent.
Macquarie Group dropped 0.75 per cent from record levels as its shares traded ex-dividend. Also going ex-dividend, ANZ shed 1.56 per cent.
The rest of the banks rallied as the bond market attracted a bid. Yields on ten-year Australian government bonds sank almost six basis points to their lowest in two and a half weeks.
Westpac rose 1.29 per cent, NAB 0.62 per cent and CBA 0.38 per cent to a new all-time closing high. CSL shed 0.76 per cent.
Incitec Pivot fell 0.63 per cent after announcing its Gibson Island manufacturing plant will close at the end of next year. The explosives and fertiliser firm said it had been unable to secure an economically viable long-term gas supply, but would explore repurposing the facility to produce green ammonia.
Other markets
Oil started the new week at a sprint. Brent crude surged 90 US cents or 1.1 per cent to US$83.64 a barrel.
Gold rose US$5 or almost 0.3 per cent to US$1,821.80 an ounce.
The dollar held broadly steady at 73.96 US cents.
